I am interested in purchasing a home in the next 12 months. I have recently raised my credit score to a 656, and my median score is a 705. Should I wait for my median score to go over 740 before attempting to get pre-approved? Or is it the same money out of pocket and interest rate if I do it now through the VA loan program? – Francisco


We think it would be worth waiting until your score improves to apply for any sort of mortgage. A small change in your interest rate can mean a lot more, or less, money in your pocket when it comes to a 30-year mortgage. Whether you go with a VA or a conventional loan, your interest rate will, in large part, be dependent on your credit score. And in today’s tight lending environment, higher is better.
The VA loan offers the advantage of requiring no down payment and potentially bringing very little cash to the table when you close as compared to a conventional loan. Another consideration, which might cause you to move sooner rather than later, is the interest rate environment in general. We don’t have a crystal ball, but it’s likely that rates will rise in the future. Thus, delaying too long may not be palatable. Bottom line: continue to work on your credit score, consider using a VA loan, and don’t let too much time elapse before you start talking to lenders about your options.